How important is sustainability to some corporations? At AkzoNobel NV of Amsterdam, half of the bonuses for top executives are awarded based on how well their company performs on the Dow Jones Sustainability Index.

Helping those executives implement their sustainable business strategy is Frank Sherman, president of the company's U.S. division, which generated 20% of the company's 2010 global sales of nearly $19 billion.

Sherman, who commutes daily to his downtown Chicago office from his home in Milwaukee, oversees a company that won significant new business from Wal-Mart Stores Inc., which added AkzoNobel's expanded lineup of Glidden paints to its shelves.

Sherman discussed his company's sustainability focus as well as his move to and perceptions of Milwaukee during a recent conversation:

Q. How important is sustainability to your business?

A. We're now focused on sustainable products, what we call "eco-premium" products, because we're finding sustainability is a market driver and a competitive advantage for us.

Q. How has it become a market driver?

A. Well, you have these megatrends of population growth and scarcity of resources. You have a tremendous emerging middle class, and they are all demanding a higher quality of life. It's amazing. The Chinese are paying premium money for the branded products, the real thing. All of the branded companies, clothing and accessories, their biggest growth market is China, because the emerging Chinese middle class wants to have what we have.

Q. What moves have you made toward more sustainable products?

A. We sell various solventless coating brands for homes, we have exterior paint brands that reflect a lot of the infrared radiation to reduce energy use. We have additives, when you see asphalt paving, most asphalt roads are done in a process called a hot mix, at a very high temperature. You see a lot of the fumes coming off. We have an additive that allows them to pave at a low temperature, which reduces the fumes, the VOCs (volatile organic compounds). It reduces the energy input, and it allows them to go a farther distance from where they make up the mix. It gives them a longer range.

Q.How did you get to Milwaukee and start the Chicago commute?

A. I have a daughter at Marquette, and four of my kids went to UW-Madison. So after paying a gazillion dollars in out-of-state tuition, I moved to the state; so that wasn't the brightest move.

We had moved from the East Coast to Naperville (Ill.) back in the late '80s and raised our five kids, and once they got out of the house we decided to downsize. The plan was to buy a place - with all the kids going to school up here we fell in love with Wisconsin. We wanted to buy a place on the lake in Wisconsin and then move to downtown Chicago. We were looking up north and one weekend we came to visit Mary here and we just started to drive around the lake and we fell in love with the city.

Q.What made you fall in love with Milwaukee?

A. I like Chicago a lot but to contrast it: It's smaller, more accessible, friendlier. I just find people here easygoing, very honest. I really enjoy the city. We have season tickets to the MSO, go to the Broadway series, take in the Bucks. It's a lot of fun. It's got a lot of things to do. On the other hand the city has a lot of challenges, between the education system, some of the racial injustice that exists in our judicial system and some of the racial profiling, the infant mortality, homeless, the poverty level. Our city is like any other urban area - maybe worse.

Q. What are you doing in the community?

A. Being a little bit on the tail end of my career, I really want to get more active. We are active in church - St. Benedict the Moor, which is a small parish but they have run a meal program in the basement for 300 to 500 meals a night, six nights a week for decades. The parish has only 140 parishioners, but each night a different church group or nonprofit or religious organization sponsors a meal. And if you look at the board of who sponsors what night every month, it's a United Nations: Muslim, American Indian, Jewish, various Protestant faiths. Although St. Ben's is Catholic, it's really an ecumenical kind of event. But I want to explore other things, like teaching or other nonprofits.

Q. How about the commute, though?

A. I said, "Let me try Amtrak." My neighbor said a lot of people do that. It's a little short of a couple hour train ride. It's comfortable: I go in the quiet car, I plug in my computer and basically I have a quiet time to work. I'm online and it's great. So I take the 6 o'clock train in, the 5 o'clock train out. I leave the house at 5:30 and get back after 7.

Q. Other than you, what operations does AkzoNobel have in Wisconsin?

A. Our footprint here is small. We have a small plant outside of Green Bay, and that's a chemical plant supplying the paper industry. We have about six or so Glidden outlet stores. Glidden is also sold through Home Depot and Wal-Mart.

Q. Wal-Mart, too?

A. We just got the Wal-Mart business last year. Wal-Mart's not a big paint outlet, but they're growing. Anything Wal-Mart goes after, they want to be big. So all the Wal-Mart brands - Wal-Mart has a good-better-best. So that's all our stuff. It's branded differently with the best being Glidden, the model brand being Martha Stewart and then the Wal-Mart brand. But it's all our paint.

Q. So is that a big coup?

A. It is. The upside and downside of dealing with Wal-Mart: It's certainly volume, but you'd better be pretty efficient because they buy pretty ruthlessly. But for us to maintain our leadership position, we have to do this.

Q. Was sustainability a component part of winning the Wal-Mart business?

A. Yes, our sustainability profile and our ability to come with more sustainable products is very important for Wal-Mart. They have various goals on products, on chemicals of concern - various things that we have to work with them over time to improve.

Q. Other than sustainability, what's your biggest focus for growth?

A. Innovation. That's what drives it.

Q. What's an example?

A. Barnacle resistant coatings for ships. They paint the supertankers with this coating. As these ships move, these supertankers start getting corrosion and marine life start attaching, and this causes drag. Our coating sheds these barnacles off as the ship moves, so over time it's shedding this marine life so it cannot attach. The other technology is a silicone-based coating that works so that they slip off. It saves a phenomenal amount of fuel. If you save 5% or 10% of the fuel required, that's a huge saving for these ship lines.

Q. What's your biggest challenge?

A. In the short term, the challenge has been in passing through raw material costs. In the downturn, a lot of the commodity chemical guys rationalized capacity and tightened up their supply, so when things came out in 2010 a lot of the supplies got tight. In 2011, when demand slacked off a bit, oil took a dip, none of that was reflected in the pricing of intermediates - they're still quite high. We're buying commodity chemicals at a high price, and we're getting pressure from our end-use markets to not pass through those costs. So that's a challenge.

Q.What's your biggest long-term challenge?

A. It's to make sure we win this "war on talent" because although the macro unemployment is high, you go to get specialty or a specific function or discipline, it can be very tight. Some of it is solved through a good infrastructure of good community colleges for technical skills that we don't have. I think Europe does a better job there. And so I think that will be a longer-term challenge.

Q. Any others?

A . Certainly one of the real game changers in the U.S. is this shale oil. That will provide natural gas for - they talk about - 100 years of demand. The main impact is natural gas is a key building block or raw material for us.

A lot of petrochemicals come from natural gas, so it will be a cheap feedstock for us to compete with not only Europe but with Asia. Other than the Middle East, the U.S. has the most competitive natural gas in the world.